Archive for April, 2011

Honda, Toyota cut India production after tsunami

Monday, April 25th, 2011 | Finance News

MUMBAI, India – Honda's India unit will halve auto production because of a shortage of components following the March tsunami in Japan, while Toyota Motor Corp. is cutting production by 70 percent.

"Honda Motors Japan is doing a 50 percent production cut," company spokesman Jnaneswar Sen said Tuesday. "We are still evaluating parts supply with some vendors only in Japan. They were severely hit by the tsunami."

Honda's plant outside the capital New Delhi turned out 61,000 vehicles in the year ending March 31, Sen said, less than its full capacity of 100,000 vehicles a year. The company hopes to resume full production after July.

Honda's engine and parts plant in Rajasthan is unaffected by the production cuts, he said.

The March 11 earthquake and tsunami devastated Japan's northeast, which was home to thousands of auto parts suppliers.

Honda Motor Co. said in a Monday statement that the supply of parts from Japan remains "fluid," with most suppliers making progress to restart production. For the few suppliers who haven't been able to make progress, Honda said it is evaluating other supply sources.

About three-quarters of the parts in most models made by Honda's joint venture with Siel Ltd. in India, including the popular Honda City sedan, come from India.

Honda Siel Cars India Ltd. sold 59,463 vehicles in the year ending March 31.

Honda has also had to cut production at its U.S. and Canadian factories.

Toyota's India unit, Toyota Kirloskar Motor Pvt. Ltd., began its 70 percent production cut on Monday. The company says it will operate at 30 percent of normal capacity through June 4 because of supply difficulties following the tsunami.

The company said March 15 that it planned to ramp up India production from 150,000 to 210,000 vehicles a year thanks to strong demand.

Japan is the second-largest supplier of cars in the world, as well as a major parts producer. Ford Motor Co., Nissan Motor Co., Mazda Motor Corp. and Chrysler have also said they are facing production disruptions due to parts shortages following the disaster.

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Silver tumbles, snaps rally ahead of option expiry

Monday, April 25th, 2011 | Finance News

SINGAPORE (Reuters) – Silver prices fell nearly five percent on Tuesday, snapping a rally in previous sessions that had carried them close to a record high, as option traders sold back metal to cover risks ahead of options expiry later in the day.

Spot silver prices had exploded in Monday's session, soaring to within 17 cents of the 1980 record high as options sellers bought silver when key strike levels at $45 and $50 came under threat of exercise.

"People are watching out for options expiry," said Yingxi Yu, an analyst at Barclays.

"There are decent-sized open interests at the strike levels of $40, $45 and $50. When there are large positions, it tends to suggest that prices may sway to those levels on options expiry."

U.S. silver futures tumbled nearly 5 percent to $44.86 an ounce by 0418 GMT, after having rallied to $49.82 in the previous session, a hair off their record high of $50.35.

Spot silver dipped 4.4 percent to $44.84.

"The market will remain very nervous, and we'll see how it goes after option expiry," said a trader in Singapore.

Spot gold fell by 0.7 percent to $1,497.25 an ounce, after a seven-day record-setting rally that pushed prices to $1,518.10 on Monday.

U.S. gold also lost 0.7 percent to $1,497.90.

There is high open interest at key strike levels of $1,500 and $1,520 on COMEX gold, which will keep prices stable until at least later in the day, traders also said.

Investors are eyeing the U.S. Federal Reserve's policy setting meeting, due to kick off later in the day.

Fed chief Ben Bernanke is scheduled to give a news briefing on Wednesday -- the first regularly scheduled by a Fed chief in its 97-year history -- that is expected to shed light on the central bank's policy stance.

"The market will be watching out for any signs of what the Fed is going to do at the end of the second round of quantitative easing," said Yu of Barclays.

"If Bernanke remains dovish, as he has been, it will provide indication that monetary policy will not be tightened significantly in the second half, which is pretty favorable for precious metals."

The dollar (.DXY) edged up on Tuesday, but is still seen wobbly, even after the euro slipped on remarks from the European Central Bank Governor Jean-Claude Trichet that a strong dollar is in the interest of the United States.

Platinum group metals fell in tandem with gold and silver. Spot platinum fell off a seven-week high of $1,836.74, down 1 percent to $1,801.99.

Spot palladium declined 1.2 percent to $749.

Precious metals prices 0418 GMT

Metal Last Change Pct chg YTD pct chg Volume

Spot Gold 1497.25 -11.20 -0.74 5.48

Spot Silver 44.84 -2.06 -4.39 45.30

Spot Platinum 1801.99 -17.31 -0.95 1.95

Spot Palladium 749.00 -8.80 -1.16 -6.32

COMEX GOLD JUN1 1497.90 -11.20 -0.74 5.38 17564

COMEX SILVER MAY1 44.86 -2.29 -4.85 44.99 33349

Euro/Dollar 1.4530

Dollar/Yen 81.64

COMEX gold and silver contracts show the most active months

(Additional reporting by Nick Trevethan in SINGAPORE; Editing by Clarence Fernandez)

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Crude falls more than $1 on uncertainty ahead of Fed meeting

Monday, April 25th, 2011 | Finance News

SINGAPORE (Reuters) – U.S. crude futures fell more than $1 on Tuesday as investors reduced risk ahead of a meeting of the U.S. Federal Reserve and after Saudi Aramco's chief executive said the kingdom was not comfortable with current oil prices.

NYMEX crude for June delivery declined as much as $1.13 a barrel to $111.15, and traded at $111.17 a barrel by 0414 GMT. Brent dropped 74 cents to $122.92 a barrel.

"We are not comfortable with oil prices where they are today...I am concerned about the impact it could have on the global economy," Khalid al-Falih, Aramco's chief executive, told an industry gathering in Seoul.

Crude snapped three days of gains, sliding along with silver and gold, as investors were uncertain whether the U.S. Federal Reserve would signal a change in its easy monetary policy after a two-day meeting of policymakers wraps up on Wednesday.

"There is some risk reduction because the market wants to watch if Bernanke will say anything about a change of stance," Tetsu Emori, a Tokyo-based commodities fund manager at Astmax Investments, said. "Any change of stance is highly unlikely."

Participants will look to the post-meeting news conference by Fed Chairman Ben Bernanke on Wednesday -- the first regularly scheduled news briefing by a Fed chief in the U.S. central bank's 97-year history -- to see how the Fed plans to exit from its ultra-loose policy.

"The market is displaying a cautious stance as any signs of the Fed tightening dollar supply would reduce crude gains," said Serene Lim, an analyst at ANZ.

Saudi Arabia has enough spare crude capacity to meet demand as oil prices extend a gain above $120 per barrel, Falih said, adding that he didn't see any tightness in global oil supply.

"They should be happy with the increases, but what Saudi Arabia is looking for is stability in prices," Emori said. "Anything outside of a range of $90-$110 makes them uncomfortable."

STOCKPILES, DOLLAR

The slide in NYMEX futures may have been steeper than Brent partly on expectations U.S. crude oil stockpiles were likely to have risen last week, with crude imports heftier than demand from refineries, a preliminary Reuters poll ahead of weekly inventory reports showed on Monday.

The increase follows an unexpected drawdown the week before which was the first decline in domestic crude stocks in seven weeks. The American Petroleum Institute will issue its data later in the day followed by the Energy Information Administration on Wednesday.

The strengthening of the U.S. dollar against the euro also weighed on oil. The euro slipped after European Central Bank Governor Jean-Claude Trichet said he shares the view that a strong dollar is in the interest of United States.

Still, U.S. oil futures have a strong support at $110 a barrel and are unlikely to dip below that level, Emori said. Prices may start to recover after the Fed meet ends as the central bank is expected to stick with its current policy, which will provide "a very good trigger," Emori said.

MIDDLE EAST

Oil has strengthened in the past few months as protests in Libya spread to other countries in the Middle East and North Africa such as Syria and Yemen, boosting fears of further supply disruptions from the region at a time when demand from key consumers such as China and India continues to rise.

Security forces have arrested about 500 pro-democracy sympathizers across Syria after the government sent tanks to try to crush protests in the city of Deraa, the Syrian rights organization Sawasiah said on Tuesday.

The independent organization said it had received reports that at least 20 people had been killed in Deraa since tanks moved in on Monday.

Italy, which has been playing a limited role in NATO operations in Libya, decided on Monday its air force would be allowed to bomb selected military targets in the former Italian colony.

Refugees fleeing Libya's Western Mountains told of heavy bombardment by leader Muammar Gaddafi's forces as they try to dislodge rebels in remote Berber towns.

(Editing by Clarence Fernandez)

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